GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - June 20, 2016) -
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Tethys Petroleum Limited (TSX:TPL)(LSE:TPL) ("Tethys" or the "Company") today provided a Corporate Update to shareholders.
- Olisol Transaction Update
- US$10 million loan facility in Kazakhstan
- Forward Work Program
Olisol Transaction Update
Following on from the Shareholders Meeting where shareholders approved the proposed Olisol Transaction the Company has engaged a law firm in Grand Cayman to carry out the process of the reduction in the par value of the Company's ordinary shares. Following approval by special resolution of the Shareholders, pursuant to Section 14(1) of the Companies Law (2013 Revision), the reduction in the par value of the shares of the Company, and thereby the authorised share capital, requires confirmation by the Grand Court of the Cayman Islands. The Company is petitioning the court for approval of the special resolution and if approved, the order of the court and the minutes will be delivered to the Registrar of Companies for registration, the resolution for reducing the par value and authorised share capital will take effect on registration. It is noted that the confirmation of the Grand Court of the Cayman Islands may be subject to certain consents being obtained and the satisfaction of certain publication requirements.
The reduction in Par Value from US$0.10 per share to US$0.01 is required to facilitate the Olisol transaction to issue the 181,240,793 approved ordinary shares at C$0.054 per share to Olisol Petroleum Limited ("OPL"), a wholly owned subsidiary of Olisol Investments Limited (together with OPL, "Olisol"), as well as a further equity fundraising, backstopped by Olisol, of 50 million shares at C$0.054, both in relation to the Olisol Transaction. It is expected that the Olisol transaction will be completed in August 2016.
US$10 million loan facility in Kazakhstan
On June 7, 2016, the Company received the first US$1 million drawdown of a newly agreed US$10 million loan facility from a leading Kazakhstan bank. The loan interest on the initial US$1 million is 11%, maturing in July 2017 and also includes a 6-month principal grace period. It is expected that the remaining US$9 million of the loan facility will be available for drawdown some time over the next month.
Olisol have been instrumental in obtaining this new loan facility and the receipt of the funds from the first drawdown is a major achievement in the Company's strategy of stabilizing the Company and commencing the new shallow gas drilling program.
Forward Work Programme: 3D Seismic Programme/Drilling
It is currently planned to conduct 3D seismic acquisition starting later in Q3 2016 after the conclusion of the recently announced tender. The goal of the survey is to identify shallow gas targets for drilling later in 2016 and into 2017 in an area of prospective interest in the south-eastern part of the Akkulka Exploration Contract, previously only covered by exploration 2D seismic. The survey covers an area that includes the AKK16 well which is currently the best producing well in the combined Kyzyloi and Akkulka Fields. The tender incorporates the acquisition of 150km2 of full-fold coverage 3D seismic with a planned initial phase of 80km2; in addition 25 line kilometers of 2D seismic is planned in the west-central part of the block to target a shallow gas prospect there.
Shallow gas drilling is planned to restart in the latter part of Q3 2016 with the drilling of KYZ110 targeting the Kyzyloi sandstone horizon in a partially developed sector of the Kyzyloi Field up dip of the producing AKK05 well. A further planned well (AKK23) is to be located in the Akkulka Production Contract targeting the Tasaran sandstone horizon. More wells are planned based on existing modern seismic however the exact order is in part dependent on the results of the new seismic acquisition. Wells are typically 650m and take up to 14 days to drill with testing usually taking up to 10 days post completion.
Chief Executive Officer, Julian Hammond, commented, "We were pleased to receive a strong vote of approval for the Olisol transaction from shareholders and now we are in the process of completing the application to the Cayman courts with a target to close this transaction and receive the private placement funds in August 2016. In parallel with this our team has been working very closely with Olisol on securing the new bank facility in Kazakhstan and we are very pleased to announce the first draw down of this facility. This funding allows us to move forward and commence drilling on existing shallow gas prospects and to acquire new 3D seismic on prospective acreage. The Company continues to focus on cost reductions and further efficiencies. With Olisol as our strategic partner, Tethys is very much focused on Kazakhstan for future growth plans."
The Company's indirectly held subsidiary, Kulob Petroleum Limited, ("KPL") the contracting partner in the Bokhtar Production Sharing Contract, has been informed by legal counsel representing Total and CNPC (the "Partners"), that on 19 May, 2016, the Partners had filed for arbitration proceedings at the International Court of Arbitration. The filed arbitration request is in relation to the Notice of Dispute received by KPL on January 8, 2016, which is in connection to the previously announced Notice to Withdraw issued by Partners on October 11, 2015, following the cash call default of September 2015. The Notice to Withdraw was rejected by KPL, which lead to the Partners issuing a Notice of Dispute. Tethys has been actively engaged with the Partners to reach an amicable resolution. Tethys Board of Directors and management team are evaluating its options and maintain an open channel of communication with Partners for further discussion.
Current Financial Position
The Company believes that it will have sufficient funding to meet its requirements in 2016 contingent on the receipt of the additional US$9 million from the Kazakh bank and the closing and receipt of funds from the Olisol transaction. Should either of these not occur then additional funding will be required. Now that the Company has received the first draw down under the Kazakhstan loan facility it has a higher degree of confidence to receive the remaining balance. The Olisol transaction is a binding transaction already approved by shareholders. This transaction is scheduled to close in August, 2016.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
Olisol and its subsidiaries and affiliates have investments in energy and oil & gas operations in the Russian Federation and Kazakhstan. Olisol is incorporated under the laws of Cyprus and is headquartered in Almaty, Kazakhstan.
Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Company or its officers with respect to Olisol's access to funds, the Kazakhstan loan facility and the placing to Olisol, and the forward work programme. When used in this document, the words "expects," "believes," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements including risks and uncertainties with respect to completion of the placing and related transactions and receipt of proceeds, required shareholder approval and required regulatory approvals, use of proceeds, waiver of currency controls and receipt of funds pursuant to the Interim Facility.
No part of this announcement constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company or any other entity, and shareholders of the Company are cautioned not to place undue reliance on the forward-looking statements. Save as required by the Listing Rules and applicable law, the Company does not undertake to update or change any forward-looking statements to reflect events occurring after the date of this announcement.